The materiality concept implies that if an error is large enough or could effect the decisions of its users, a correction is absolutely necessary. True or False?
True. The materiality concept in accounting implies that if an error or misstatement in financial statements is significant enough to influence the decisions of the users of those statements, then a correction is necessary. In other words, if the error is large enough that it could potentially impact the judgment or decisions made by the users, it is considered material and must be corrected. The concept of materiality is based on the principle that financial statements should provide accurate and reliable information for users to make informed decisions. The determination of materiality often depends on factors such as the nature and size of the error, the overall financial condition and performance of the entity, and the needs and expectations of the users.
